Performing rights organizations (PROs) are legitimate membership groups in the music industry that manage the copyrights of songs and musical compositions on behalf of artists and music publishers.
Although some see these groups as outdated in their practices, PROs support and protect artists’ copyrighted work by collecting money and distributing it in the form of royalties. This income is based on the type of music license and the contract negotiated with the business or individual holding that license.
Nearly anyone who wants to play recorded songs, perform covers of musical works, or use a song in an advertisement needs to get a license from the PRO managing the copyright. Many businesses, like radio and TV stations, large retailers, and karaoke hosts, work with PROs to hold specific licenses to use music in specific ways.
PROs often use “secret shoppers” or agents to visit venues, restaurants, or other businesses that may be playing music they have not appropriately licensed.
If you are a business owner, it is important to understand how to legally play music inside your establishment. Without the right licensing, you could receive a letter from a PRO’s legal department demanding appropriate compensation. PROs like BMI, ASCAP, and SESAC are legally allowed to send these letters of demand.
If you receive a letter from BMI, ASCAP, SESAC, or a smaller PRO, you must pay the fine or respond with information on how you are legally playing music licensed by that organization.
What Happens When Music Copyright Laws Are Violated?
Some businesses have misused music – usually by accident – and have been caught breaking copyright law by employees of the PROs. The major organizations like BMI (which stands for Broadcast Music, Inc.) , ASCAP, and SESAC send investigators out across the United States to listen to music played in any commercial setting and determine if the store owner is breaking copyright law. A violation can cost up to hundreds of thousands of dollars in fines, legal fees, and penalties to the business. The cost of a fine from one PRO can close a business that is not cautious.
There are some minor exceptions to copyright laws that allow very small businesses to play music in their stores. These are often considered situations where the business may replicate a home environment in some ways.
The homestyle exemption is in play if one small radio or television is playing whatever is broadcast from that station, or if music is played at a very low volume, intended only for employees’ entertainment.
If you’re a small business owner, it can be beneficial for you to play music in your storefront, restaurant, or club – not just for your employees’ entertainment, but for your patrons as well.
However, you cannot plug in your smartphone to a small speaker, as this actually breaks copyright law.
Until very recently, most business owners had to contact PROs to purchase general licenses or blanket licenses that covered their use of a PRO’s catalogue for a specific amount of time. After that licensing contract expired, the business owner would have to re-up it or decide not to use that catalogue anymore.
Typically, to have access to popular music or a wide range of appropriate music, business owners had to purchase licenses from several PROs. If you do not follow copyright law by getting appropriate licenses to play commercial music for business, your first indication that you must pay a PRO like BMI, ASCAP, or SESAC, is receiving a letter in the mail.
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What You Can Do When You Get a Letter From SESAC, ASCAP, or BMI
If you have received this letter, it means the PRO has determined that you have violated copyright law. Unless you have evidence to the contrary, such as a license through an existing account or a commercial-specific music streaming subscription, you must pay the fine.
If a representative from BMI, SESAC, or ASCAP has made an inaccurate statement about your business’ legal ability to play music, you can:
- Prove that you are adhering to the limitations of your commercial music streaming for business service’s terms of service.
- Show your license information from the PRO you work with.
- Argue the homestyle exemption if there was only one music source in the business and the volume was low enough to meet legal requirements.
- Double-check the maximum occupancy of your business with the fire marshal since that is one part of the equation.
- Be sure to license the music used for live events like karaoke nights or DJs. As the venue owner, you are responsible for this process.
- Ask bands performing in your establishment to avoid playing covers of existing songs.
- Determine how a cover charge for live events may impact the license cost or fee.
- Consider getting a jukebox so patrons can manage their own music preferences.
Small Business Music Licensing Solutions
With the advent of music streaming services, the way people want to listen to music is changing. They have more access to a wider catalogue, allowing them to find music they loved years ago, discover new music, or create playlists for any occasion.
Famous streaming services like Spotify, YouTube, Google Play, and Apple Music all provide individual licenses for music. You can play songs from these subscription services in a private setting, but you cannot use these services to stream music in your business.
When you are setting up a retail sound system in your business, you have some options to get songs without paying expensive royalties to BMI, ASCAP, or SESAC and without breaking copyright laws. For example, you can search for royalty-free, public domain, or copyright-free music.
SoundCloud offers the option of searching with these terms, or you can search the Creative Commons for new music licensed directly by the artists. You can also find a commercial music streaming service that manages licenses with PROs on your behalf, like Cloud Cover Music.
Cloud Cover Music gives you the functionality of a personal streaming service, but for your business. We have curated playlists, the option to make your own playlists, and the ability to pre-program music using a calendar function. With some CCM subscription options, you can also insert your own in-store messaging as well as program playlists for multiple stores.
Why Did I Receive a Letter From BMI, ASCAP, or SESAC?
If you received a letter from BMI, ASCAP, SESAC, or another PRO about licensing fees, chances are that an agent from that PRO entered your business to listen to the songs you played. If the agent determined that you played songs from the PRO’s catalogue without negotiating the right licenses or contract, then you will receive a letter informing you that you have violated intellectual property laws in the United States.
The first letter will ask for licensing fees and inform you of the best way to negotiate a contract with the PRO, so this violation does not occur again. If you fail to, or refuse to, respond, you will receive further letters, potentially including financial penalties for continuing to violate music copyright laws, and you will eventually be taken to court.
You should respond to the PRO right away when you receive a letter. This may require finding legal counsel regarding intellectual property to help you draft a response. However, you may also be able to use their website to sign up for their services and begin negotiating a contract to license music.
Is This Legal & Do I Have to Pay?
You may argue that you didn’t know about music copyright and streaming services, but this does not influence whether you must pay a PRO if you break copyright law. Unfortunately, a PRO is well within their rights to legally pursue you if you violate their intellectual property rights.
Major PROs will not hesitate to send you letters or take you to court. One article reported that, in 2016, ASCAP alone filed 10 lawsuits against bars and restaurants for unauthorized use of its songs and other copyrighted musical works. ASCAP claimed that it has, over the past two years before the filings, made attempts to license music with these venues, which have refused to negotiate contracts and pay licensing fees.
In some cases, you may receive a letter about licensing from a PRO when you have legal access to play the song. This is rare, but you should prove that you have a contract for the music.
PROs sometimes have overlap in which songs or artists are in their catalogue, so you may pay one PRO for a song or artist who is also supported by another PRO. In this case, respond to the letter with proof that you have a contract with the other PRO managing the music you played.
If you use a commercial streaming service like Cloud Cover Music, you should also provide information on working with us to stream songs in your business. CCM negotiates contracts with major and minor PROs around the world, so you can legally stream music in your business without directly negotiating expensive contracts with a performing rights organization.
- 5 Things to Know: My Business Got a Letter From ASCAP/BMI/SESAC. (June 20, 2016). Soundstr.
- ASCAP, BMI and SESAC Force Local Coffee Shop to Shut Down Live Music. (October 29, 2014). Digital Music News.
- When Should a Small Business Pay ASCAP for BMI? (October 13, 2011). The Palo Alto Area Bar Association.
- I’ve Been Contacted by a Representative of ASCAP, BMI, or SESAC and They’re Getting Aggressive. What Should I Do? Rockbot Support.
- How to Reduce Your Licensing Fees to the PROs. (June 15, 2015). Entertainment Attorney Blog.
- The Music-Copyright Enforcers. (August 2010). The New York Times.
- ASCAP Sues 10 Venues that Refuse to Pay to Use Music. (April 2016). HypeBot.com.